Cash v. the Cushion

Statistically, last week was another week of superlatives: practically every business index went up except consumer-goods stocks, which hit a new low for the year.

Production. The Federal Reserve Board released its preliminary estimate of April production, which had inched up one point, to 203% of the 1939 average. This confirmed the belief that production has practically reached its overall ceiling. Most noteworthy increase for the week: railroad carloadings, which bettered the same week in 1942 for the second time this year, thanks to larger coal, coke and iron ore shipments. Last week the Association of American Railroads announced that in April the rails delivered over 3,000,000 tons of export freight to U.S. ports--the biggest load ever, 25% above their deliveries in April 1942.

Money. The production boom pyramided the income boom. The Department of Agriculture, reporting cash farm income for March up 13.5% over February, noted that "since May 1940, the seasonally adjusted index . . . has risen sharply with only minor interruptions." SEC reported that, despite the biggest tax on payments in history, total liquid savings of individuals in the first quarter of 1943 stood at $9.9 billion. Of this a whopping $4.3 billion was in cash and demand bank deposits and only $2.6 billion ($300 million above the last quarter of 1942) was stored away in war bonds.

Trade. That huge cash-in-the-hand figure came despite an unprecedented flow of cash into consumer goods: department-store sales jumped again last week, were up 16% over last year. But the most ominous statistic for civilians was a decrease: in April, for the third consecutive month, department-store stocks went down (the estimate: 60% below last summer). Manufacturers' hoarded stocks are down too, and new production is nowhere near large enough to meet the demand. Example: in Manhattan last week, dress buyers could get only about 10% of their cotton reorders filled. At every level, from manufacturer to corner store, the fat cushion of consumer goods is deflating fast.

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